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Who Audits the IRS?

It is easy to assume that the IRS is all powerful, and operates with the goal of collecting as much money for the government as it can, with nobody looking over its shoulder.

The Internal Revenue Service is indeed a powerful part of the government, feared by many even more than the FBI, the CIA, black helicopters or even public speaking (rumored to be well ahead of death in the list of things which terrorize us). But it, too, has an “auditor,” which examines its activities.

That function is performed by the Treasury Inspector General for Tax Administration (TIGTA). The IRS is an agency within the U.S. Department of the Treasury, so the Secretary of the Treasury has ultimate responsibility for it.

The TIGTA has just delivered his semi-annual Message to Congress, during which he submitted a report covering the period of October 2, 2013 to March 31, 2014. Among many other findings, the Inspector General reports as an example that the IRS has not developed processes to address the majority of discrepancies between deductions claimed and income reported for alimony payments. In reaching this conclusion, he says that they analyzed 567,887 returns from the Tax Year 2010 and determined that the amount of deductions for alimony exceeded the amount of income reported by more than $2.3 billion dollars. (Alimony is deductible by the payer but taxable to the recipient ex-spouse.)

Also reported are serious violations of the law by some IRS employees, including convictions against, or guilty pleas by, corrupt IRS employees who separately conducted or participated in the conduct of criminal tax identity theft schemes in Kentucky, Georgia, Missouri, Pennsylvania and California.

Although some of these findings are shocking, it is good to know that the Agency which holds taxpayers to a high standard of compliance are themselves examined. While it is unlikely that the Treasury Inspector General for Tax Administration’s office finds every administrative or criminal wrongdoing within this huge agency, at least IRS employees realize that their activities are subject to “audit” themselves.